GREXIT and the sovereign crisis of trust: why the Greeks should not accept the German terms of austerity

Greeks
should not accept Germany's austerity measures but should remain in the euro,
and ultimately seek a federal EU. This is the only way to end the sovereign
debt crisis and restore EU trust, solidarity and collective responsibility.

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If it does not abide by its programme of economic reforms
and austerity measures, Greece is openly threatened with
expulsion from the euro. The next round of elections scheduled for June 17 is
crucial, as Greek voters will be de facto
called to decide upon whether or not to leave the euro and with that, the fate
of the eurozone and the European project as a whole will be determined.

For
Greece, the options are as follows:

Staying
in the euro by accepting the austerity pact as it is

Exiting
the eurozone by rejecting the austerity measures, and

Remaining
in the euro by renegotiating the austerity prescriptions.

But what are the effects of
austerity on the Greeks? Prolonged austerity and reduction of government
spending have caused the Greek economy to stagnate. Job losses along with
pension and wages cuts have created a poverty
crisis, with the emergence of a new class of urban poor: 1/3 of Greeks
live beneath the poverty line, 20,000 Greeks in Athens were made homeless over
the past year, over a 100,000 companies went bankrupt in the last year and some
50% of young people are currently unemployed. In the past two years the suicide
rates have tripled. So the grim list of the austerity figures goes.

Should
Greece follow the Troika (EC, IMF, ECB) diktat
or rather seek exit? Or, is it possible for the Greeks to renegotiate the terms
of the fiscal compact so as to avoid choking on the noose which hangs around
their necks? My claim is that the austerity
pact, as it is now, is
fundamentally illiberal, anti-democratic and exploitative and reflects the
deepening of a sovereign crisis of trust in the EU,
involving financial markets, sovereign states and their demoi.

Two
questions sum up a big moral dilemma: why
should German taxpayers bail out profligate Greece
(is Greece actually not responsible for its own conduct?) and why should
the Greeks, in turn, accept the terms of the ‘German bailout’, even if those
measures infringe on such fundamental values as their self-respect, freedom and equality?

One
can think of different reasons why Germany should show more solidarity
towards the Greeks. For instance, some economists think that, if Greece is not saved, a domino
effect will hit the eurozone:
due to the high level of structural interconnectedness
between the eurozone countries, if Greece exits the euro, a deeper crisis of
confidence will spread over the other weak economies of the eurozone,
ultimately leading to the disintegration of the euro and of Europe, which in
turn would leave everybody worse off, Germans included. This pro-solidarity
argument is rather utilitarian and ultimately
tailored to feed Germany’s self-interest. Nevertheless, the empirical
assumption describing the eurozone as a holistic organism, in which the single
parts contribute to the standing of the whole, is essentially raised by any reasonable
normative solution to the crisis.

Building on this assumption, one may also think of an
argument in terms of political equality: we, the Europeans, are part of
a transnational political community that is the EU. If every nation-state wants
to participate as an equal in the politics of the community, without being
subjected to the arbitrary imperium of the strongest nation, the
conditions of equality between nation-states must be guaranteed: thus
redistribution from richer to poorer countries is required.

Without
venturing deeper into these arguments, keep them in mind, as I argue why the
Greeks should not accept the German terms of austerity as they are now.

Based
on the fact that they have generated a poverty crisis, the austerity measures
imposed on Greece are fundamentally illiberal in the sense that they are
undermining the Greek people's:

Self-respect. The
implementation of the austerity measures represents the enactment of a ubiquitous
master narrative opposing southern European untrustworthy and undeserving
countries versus northern virtuous and deserving nations.

Freedom. Intended as
the political freedom of a people to decide for themselves but also as the
economic freedom from need.

Equality. The impact
of poverty in Greece is affecting individual autonomy.

Moreover,
at present, the austerity measures imposed on Greece lack any democratic form of legitimacy and thus represent, instead, the imperium of the strong northern nations
(together with the financial markets) over the weak ones.

Obviously,
in the next round of elections the Greeks could vote against austerity and in
favour of exit from the euro, hence apparently restoring their lost
sovereignty. In this way, the illegitimacy and illiberal character of the
austerity reforms would be exposed for what they are. However, this is rather like presenting
a patient affected by lung cancer with the options of either continuing
to be treated with the same unsuccessful medicine, or choosing to cease treatment
by exiting the hospital, exposing the patient to lethal risk. Wouldn't it be
preferable for the patient's well-being to be presented with the option
of simply changing the cure?

My
position here is that a renegotiation of the austerity pact – lessening the
austerity demands, focusing on economic growth and enabling substantial
mechanisms of solidarity and redistribution of resources to flow from richer to
poorer countries in the eurozone – would be the most desirable solution for
Greece and the EU overall.

However,
one may well argue that mechanisms of solidarity, such as the eurobonds or the
adoption of some form of mutualisation of the debt, require trust
between the parties, hence among the eurozone countries. The doctor has to
trust the patient affected by lung cancer that she will not secretly start
smoking again. The issue here is that Germany does not trust Greece's
commitment to the virtuous path, although the Greeks have shown strong
commitments in recent months to working towards this goal.

However,
how can a party become more trustworthy? A party can be compelled to be more
trustworthy by institutionalizing mechanisms of trust so that if one party
breaks the trust then he will incur sanctions. However, to make those sanctions
legitimate, those affected by them should also have a say in how to build them.

This
is certainly no issue to be solved in the upcoming Greek elections, but a long
term problem of how the EU is to be imagined. In this respect, I am keen to
argue in favour of a fully federal and democratic United States of Europe as
the most desirable way of settling the Greek and the EU existential crisis in the long term. Stronger political unity has to
determine a shared economic policy and the former has to be democratically
constructed.

Finally, one can say that the Greek ballot raises broader
questions on trust, solidarity and collective responsibility
within the EU and ultimately impels those of us who are Europeans to think of
what institutional form the EU should embrace in order to emerge from its
existential crisis and to effectively re-establish those bonds of trust between
peoples, political institutions and financial markets that are necessary for
the well functioning of a democratic Europe. A democratic Europe of the peoples
may seem a utopian goal, but this crisis could provide the impetus for constructing that way forward.